Chapter 3

Who is responsible for a corporation?

Board of Directors -act on best interest of the shareholders-WHICH is RETURN ON INVESTMENT -Is the BoD responsible for all decisions? No -Is there an ethical conflict? yes, Corporate social responsibility

Equitable Climate

making everyone feel safe and equal "Business case" for ethics, equity, and diversity 1. Ethics (moral responsibility/right thing to do) 2. Productivity (increases) 3. Legal

Story

narrative based on true events, which is repeated frequently and shared among organizational employees -paint pictures that help symbolize firm's vision and value

Costco

o Costco-"everything we do is to provide goods and services to the customer at a lower price" Has to also keep costs low; does so in the buildings -Also has a loyal workforce

Symbol

object, act, or even that conveys meaning to others o Can be considered a rich, nonverbal language that vibrantly conveys the organization's important values concerning how people relate to one another and interact with the environment

Merger

occurs when two or more organizations combine to become one

Customers (Task Environment)

people and organizations in environment that acquire goods or services from the organization *determine org's success; orgs have to be responsive to marketplace changes -growth/market share -who is our customers? quantitative info -think loyalty vs. growth

Visible corporate culture

-Culture that can be seen at the surface level -Artifacts, such as dress, office layout, symbols, slogans, ceremonies -What everyone sees (ESPOUSED VALUES)

Specific Tools for Legal-Political factors

-Occupational Safety and Health Administration OSHA -Environmental Protection Agency EPA -Fair trade practices -Libel statutes -Consumer protection and privacy legislation -Product safety requirements -Import and export limitations -Information and labeling requirements

Espoused, enacted, and assumption

1. Espoused-explicitly stated (mission, vision, core statements) 2. Enacted-what actually goes on; override espoused values (practiced) 3. Assumptions-taken for granted over time; become part of corporate culture *ultimate source & core part of company's culture You want enacted and espoused to overlap, not go against each other

Competing Values Framework

4 components: internal, external, flexibility, stability 4 types: adaptability, achievement, involvement, consistency *types of corporate culture

Suppliers (Task Environment)

A person or organization that provides supplies, raw materials, services, equipment, labor or energy, to other organizations to produce its output -Goes with supply chain -Suppliers can also have loyal customers (long term, lower prices) *brand name suppliers; boils down to reputation and service

Achievement culture

A results-oriented culture that values competitiveness, personal initiative, and achievement. -may feel aggressive; not need for flexibility or rapid change (external, stability)

Quadrant A vs. Quadrant B

A: focused on bottom-line results and pay little attention to organizational values Profitable in the short run, but success is difficult to sustain over long term because "glue" that holds org together (cultural values) is missing B. high emphasis on both culture and solid business performance as drivers of organizational success Managers align values with company's day-to-day operations; hiring practices, performance management, budgeting, criteria for promotions and rewards, and so on -Things of production vs. humanity of production (performance vs. culture

JIT (just in time)

Allows plants and raw materials to be delivered to production plants just before they are needed. -improves return on investment, quality, and efficiency because much less money is invested in idle inventory • Can be bad if there is something like a natural disaster when products cannot be shipped out

Invisible corporate culture

Deeper values and shared understandings held by organization members -Expressed values -Underlying assumptions -Deep beliefs -Less obvious values (ENACTED VALUES) **If visible and invisible values don't overlap, assumptions take over

cultural leader

Defines and articulates important values that are tied to a clear and compelling mission. -good managers overcommunicate -two key areas 1. articulates a vision for organizational culture that employees can believe in 2. heeds the day-to-day activities that reinforce the cultural vision

What does natural dimension includes?

Environmental groups advocate action/policy -Reduction and cleanup of pollution -Development of renewable energy resources -Reduction of greenhouse gases -Ethical treatment of animals -Sustainable use of scare resources

International (General environment)

In external environment, represents events originating in foreign countries, as well as opportunities for companies in other countries -Whole lot of newness -provides new competitors, customers, suppliers, and shapes social, technological and economic trends -ex. Starbucks expanding internationally -Lots of risk; communication/language barrier, exchange rates, laws, trade

Organizational environment (external)

Includes all elements existing outside the boundary of an organization that have the potential to affect it -competitors, resources, technology, and economic conditions -DOESN'T include events so far removed from org that their impact is not perceived

Does the economy need regulating?

Invisible hand-Adam Smith -This theory says no However, humans are the problem and they are not always rational

Southwest culture

Kelleher believed that how a company treats employees determines how employees treat customers -happy customers create and sustain shareholder value

Competitors (Task Environment)

Organizations in the same industry or type of business that produce goods and services to the same set of customers -constantly battling for loyalty with same group of customers -Samsung vs. Apple *SWOT analysis is the minimum that your company should be concerned about (always changing)

Boundary spanning

link to and coordinate the organization with key elements in the external environment -business intelligence -big data analytics -competitive intelligence (CI)

Two Parts of External Environment

Task environment General environment **aren't always comprehensive lists; may be very small and ever-changing

High-performance culture

a culture that is based on a (1) solid organizational mission or purpose, (2) embodies shared adaptive values that guide decisions and business practices, (3) and encourages individual employee ownership of both bottom-line results and the organization's cultural backbone

involvement culture

a culture that places high value on meeting the needs of employees and values cooperation and equality -Family-like atmosphere Wants participation of employees to adapt rapidly to changing needs of environment (internal, flexibility)

Hero

a figure who exemplifies the deeds, character, and attributes of a strong culture -role models for employees to follow -strong legacies may continue to influence even after they are gone

Slogan

a phrase or sentence that succinctly expresses a key corporate value -use sayings to convey special meaning to employees o Cultural values can be discerned in written public statements, such as corporate mission statements or other formal statements that express the core values of the org

Ceremony

a planned activity at a special event that is conducted for the benefit of an audience -managers want to provide dramatic examples of company values -reinforce valued accomplishments, create bond among people by allowing them to share important event; celebrate heroes

competitive intelligence (CI)

activities to get as much information as possible about one's rivals

Influence the envrionment

also part of business intelligence; have to combine different things with business to influence external environment (nature) -taking in lots of information

Adaptability culture

characterized by values that support the company's ability to interpret and translate signals from the environment into new behavior responses -fast response and high-risk decision making (external, flexibility)

strategic issues

events or forces either inside or outside an organization that are likely to alter its ability to achieve its objectives -as environmental turbulence increases, strategic issues emerge more frequently Managers use several strategies to adapt to these strategic issues, including business intelligence applications, attempts to influence the environment, and mergers or joint ventures.

Types of agencies

executive and independent Independent/administrative (FDA-food and drug administration, OSHA-occupational safety and health administration, ADA, EPA) Executive: CIA, "Department of's"

Economic Dimension (General Environment)

general economic health of the country or region in which the organization operates -includes consumer purchasing power, unemployment rates, and interest rates **dealing with uncertainty -organizations operate in a global environment that is complex today

legal-political dimension (general environment)

government regulations at local, state, and federal levels, as well as political activities designed to influence company behavior -US political system encourages capitalism and avoids overregulation -Managers work with lawmakers; educate lawmakers about products and legislation's impact on their business strategies

Natural Dimension (General Environment)

includes all elements that occur naturally on Earth, including plants, animals, rocks, and resources such as air, water, and climate **natural environment doesn't have a voice, and therefore, might need regulating -Orgs have to be sensitivities to environment; emerging as critical policy focus and a necessity for industries -Influence comes from other sections, including government regulation, consumer concerns, the media, competitors, employees

sociocultural dimension (general environment)

includes demographic characteristics, norms, customs, and values of the general population -important characteristics: geographical distribution and population destiny, age, and education levels -growing diversity is leading to changing demographics of the workforce -today's demographic profiles are foundation of tomorrow's workforce and consumers CURRENT TRENDS -Technologically savvy customers -Widespread social equality -growing diversity

Internal environment

includes elements within the organization's boundaries -such as employees, management, and corporate culture o As an open system, organization draws resources from the external environment and releases goods and services back to it

organizational ecosystem

includes organizations in all the sectors of the task and general environments that provide the resource and information transactions, flows, and linkages necessary for an organization to thrive -interaction among communication of organizations in environment; everything surrounding it

Task Environment

includes the sectors that conduct day-to-day transactions with the organization and directly influence its basic operations and performance *direct affect -customers, competitors, suppliers, labor market -closer to organization

General environment

indirectly influences all organizations within an industry and includes five dimensions *indirectly affects; interaction among community -social, economic, legal-political, international, natural, and technological ACTUAL Parts: Technological, natural, sociocultural, economic, legal/political, international

Shaping corporate culture

key role in learning and innovative responses to situations -threats from external environment -challenging new opportunities -organizational crises **can't just focus on this; have to thing about performance

environmental uncertainty

lack of information needed to understand or predict the future and environmental needs and changes -High uncertainty: many external factors; changing rapidly -Low uncertainty: few external factors; they are stable

Labor Market (Task Environment)

people in environment who can be hired to work for the organization -unemployment rate, skills, are they a good fit 1. Growing need for computer-literate knowledge workers 2. Necessity for continuous investment in human resources through recruitment, education, and training to meet the competitive demands of borderless world 3. Effects of international trading blocs, automation, outsourcing, and shifting facility locations on labor dislocations

Business intelligence

results from using sophisticated software to search through internal and external data to spot patterns, trends, and relationships that might be significant -companies that most effectively acquire, interpret, disseminate, and use info come out as winners

Dodd-Frank Act

rule requiring that large public companies disclose the pay gap between their CEOs and rank-and-file employees -more fair to shareholders

technological dimension (general environment)

scientific and technological advancements in a specific industry as well as in society at large -advances in technology drive competition and help innovative companies gain market share -Industries that fail to adapt face DECLINE -Advances can create new threats; cybercriminals hacking

Big data analytics

searching and examining massive, complex sets of data to uncover hidden patterns and correlations and make better decisions

joint venture

strategic alliance or program by two or more organizations -occurs when project is too complex, expensive, or uncertain for one firm to handle alone

Corporate Social Responsibility (CSR)

the notion that corporations are expected to go above and beyond following the law and making a profit Business's concern for welfare of society -businesses working together for the common good -Same 3 elements as equitable climate ethics, legal, productivity

corporate culture

the shared experiences, stories, beliefs, and norms that characterize an organization; shared by the members of that org -something internal to organization, but shared by external environment and shapes how managers respond to changes in external environment -concept of culture helps managers understand the hidden, complex aspects of organizational life. -symbols, stores, heroes, slogans, ceremonies

Consistency culture

values and rewards a methodical, rational, orderly way of doing things -following rules is sometimes hard to do in fast-paced world (internal, stability)